Princess Cruises and Holland America Line filed a lawsuit against a partner in Turkey on February 28, 2017. The lawsuit complaint alleges the trading partner, Sea Song Tours (SST), overcharged the cruise lines. The lawsuit alleges four points:
- 1. Breach of Contract
- 2. Breach of Implied-in-Fact Contract
- 3. Breach of the Implied Covenant of Good Faith and Fair Dealing
- 4. Unjust Enrichment/Restitution.
This lawsuit also reveals some interesting facts, which novice cruise ship passengers might not know. The cruise lines are pimping out their passengers to vendors in countries where Western passengers are part of a multi-million dollar, marketing scheme. It is being done in a geographic region that is unstable and currently under U.S. State Department warnings.
“Since approximately 2005, Defendant SST has contracted with the Plaintiffs on a yearly basis to operate a shopping concession at Turkish ports that are called upon by the Plaintiffs’ cruise ship vessels, and said agreements were referenced as that year’s Shopping Agreement.”
That shopping agreement included “Each year, the promises remained the same: the Plaintiffs contractually promised to extol the quality and uniqueness of Defendant SST’s wares to its cruise line passengers prior to mooring in Turkey, and in exchange, Defendant SST contractually promised to pay the Plaintiffs either a percentage of its shopping commissions upon meeting sales thresholds or Defendant SST paid the Plaintiff’s a guaranteed sum of money.
Princess Cruises Losing Millions of Dollars To Legal Issues
Cruise Bruise asked Princess Cruises Lawyer Jeffrey Maltzman, who filed the lawsuit on behalf of his client, if he had any comment on the litigation. Maltzman represented me a case a few years back and I agreed, if a case came up, to consult him before writing any articles about his client. “If you would like to state anything about the case, I will be happy to include it. Maltzman responded, “I am not sure the lawsuit is really newsworthy. It is simply a breach of contract claim alleging that SeaSong breached a business advertising contract with HAL.”
That is partially true; but, there is a much bigger “newsworthy” picture here. It is interesting to note, the lawsuit was filed by Maltzman, three months after a December 1, 2016, FBI announcement, that Princess Cruises had been proven to be in violation of U. S. regulations. A federal judge “imposed a $40 million fine on Princess Cruise Lines for intentionally polluting the ocean and placed the Carnival Corporation subsidiary on probation for five years.”
That fine was imposed after Christopher Keays, 27. from, Scotland, a cruise ship junior engineer, notified authorities that the cruise line was illegally dumping prohibited items into the ocean. On April 19, 2017, Keays was awarded $1,000,000 as reward for blowing the whistle.
Turkey Cruise Line Port Calls Cancelled
Then, consider these facts impacting Princess Cruises. Norwegian Cruise Line, Royal Caribbean Cruise Lines, Celebrity Cruises, Holland America, Cunard and P&O Cruises canceled calls in Turkey through at least the end of 2017. Our cruise ship schedule for Turkey shows both Princess Cruises and Holland America Line, who are both parties to the lawsuit, still have Turkey calls scheduled in fall 2017. It is a huge money grab for those cruise lines as the case below illustrates.
Then, more bad news affecting Carnival Corp revenue came to light. On March 28, 2017, the U.S. State Department issued a formal Travel Warning for Turkey that cites increased threats from terrorist groups throughout the country.
“U.S. citizens should avoid travel to southeast Turkey and carefully consider the risks of travel to and throughout the country,” the State Department said in the warning. The agency noted that in late October it ordered the departure of family members of employees posted to the U.S. Consulate in Istanbul “based on security information indicating extremist groups are continuing aggressive efforts to attack U.S. citizens in areas of Istanbul where they reside or frequent.”
This is important, because just today, the India Times reported, ” Turkey’s talks with Russia about the purchase of the S-400 air missile defense system have reached a “final stage”. ” However, several news sources claim the April 3, 2017 St. Petersburg, Russia terror attack was financed from Turkey.
On the other hand, numerous Russian media sources reported on April 19, 2017, saying that “Turkey’s introduction of limitations on the supply of agricultural products from Russia, including wheat, was a stab in the back”. The Mediterranean has gone from bad, to worst for cruise ship calls and their profitability, with Turkey right in the midst of the cruise industry safety and profitability issues.
Princess Cruises v. Sea Song Tours Lawsuit Stated Facts
“Plaintiff HOLLAND AMERICA LINE, N.V., (hereafter “HAL”) is a limited liability corporation duly organized and operating under the laws of the State of Washington. HAL is a full-service cruise line entity headquartered at 450 Third Avenue West, Seattle, WA 98119, USA, and HAL’s fleet of 14 ships offers more than 500 annual cruises to 415 ports of call in 98 countries, territories, and/or dependencies, which includes ports of call in Turkey.
Plaintiff PRINCESS CRUISE LINES, LTD., (hereafter “PCL”) is a limited liability corporation duly organized and operating under the laws of the State of California. PCL is a full-service cruise line entity headquartered in Bermuda with its Principal Place of Business in California at 24305 Town Center Drive, Santa Clarita, CA 91355, USA, and PCL’s fleet of 17 ships taking more than one million passengers to more than 300 annual ports of call on six continents, which also includes ports of call in Turkey.
HAL & PCL (hereafter collectively “the Plaintiffs” and/or “HAL & PCL”) are both wholly owned subsidiaries of the Carnival Corporation & PLC, the largest cruise line company in the world, which is headquartered at 3655 N.W. 87 Avenue, Miami, Florida 33178, USA.
Defendant ORIENT DENIZCILIK TURIZM SANCYI VE TICARET, A.S., d/b/a SEA SONG TOURS, (hereafter “Defendant SST” and/or “SST”) is Turkish corporate entity of an unknown type duly organized and operated under the laws of Turkey. Defendant SST is a Turkish travel agency that is headquartered at Binbirdirek Mah. Peykhane Caddesi No: 33, 34122 Fatih/Istanbul, Turkey.
Since approximately 2005, Defendant SST has contracted with the Plaintiffs on a yearly basis to operate a shopping concession at Turkish ports that are called upon by the Plaintiffs’ cruise ship vessels, and said agreements were referenced as that year’s “Shopping Agreement.”
Each Shopping Agreement was more or less identical in that the Plaintiffs contractually promised to extol the quality and uniqueness of Defendant SST’s wares to its cruise line passengers prior to mooring in Turkey, and in exchange, Defendant SST contractually promised to pay the Plaintiffs either a percentage of its shopping commissions upon meeting sales thresholds or Defendant SST paid the Plaintiff’s a guaranteed sum of money.
Each year, the Plaintiffs offered a Shopping Agreement to Defendant SST, and Defendant SST either accepted said agreement expressly or impliedly by conduct.
Each year, the promises remained the same: the Plaintiffs contractually promised to extol the quality and uniqueness of Defendant SST’s wares to its cruise line passengers prior to mooring in Turkey, and in exchange, Defendant SST contractually promised to pay the Plaintiffs either a percentage of its shopping commissions upon meeting sales thresholds or Defendant SST paid the Plaintiff’s a guaranteed sum of money.
Each year, the Plaintiffs did all of the significant things that the contract required it to do, which included, but was not limited to, the following acts:
Distributed promotional materials to each cruise line passenger’s cabin that contained merchant descriptions and maps for Defendant SST’s merchants;
Recommended Defendant SST’s merchants in all communications with the Plaintiffs’ cruise line passengers regarding Turkish ports of call;
Played Defendant SST’s “shopping video” that encouraged the Plaintiffs’ cruise line passengers’ patronage at Defendant SST’s merchants stores in Turkey;
Allowed time for “shopping stops” at Defendant SST’s merchants in Turkish ports of call after the Plaintiffs’ cruise line passengers’ shore excursions in Turkey;
Abstained from the promotion of other Turkish port merchants whose goods were similar to Defendant SST’s merchants to the Plaintiffs’ cruise line passengers; and
Permitted Defendant SST to tell the Plaintiffs which Turkish port merchants Plaintiffs could send its cruise line passenger customers to under the shopping agreements.
If that year’s contract was not contemporaneously signed, the Plaintiffs and Defendant SST understood that a contract impliedly governed their conduct due to a history of prior dealings.
Here, the parties to each year’s shopping agreement never recanted or reneged on their contractual duties to perform at any point in time. The Plaintiffs always upheld its contractual promises to Defendant SST and directed their cruise line passengers to SST’s merchants, and the net commissions and/or a guaranteed payment owed to the Plaintiffs under that year’s shopping agreement was always paid by Defendant SST.
For example, in 2013, that year’s Shopping Agreement was not signed by until October 14, 2013, and at that time approximately eighty percent of the Plaintiffs’ cruises to Turkey had already occurred. Yet, Defendant SST paid the Plaintiffs as though an express contract bound the parties for the entirety of 2013.
Attached hereto as Exhibit “B” to Plaintiffs’ Complaint is a true and correct copy of emails exchanged in February of 2014 between Defendant SEFER and Mark Barnard (Plaintiffs’ Onboard Revenue Manager) that related to Defendant SST’s payment of $316,734.56 net commissions due to the Plaintiffs under the 2013 Shopping Agreement.
Moreover in 2014, as was the case for the vast majority of the time under the 2013 Shopping Agreement, the Plaintiffs and Defendants acted in accordance with the existence of a binding written contract in 2014 when no signed writing controlled that year’s Shopping Agreement.
Attached hereto as Exhibit “C” to Plaintiffs’ Complaint is a true and correct copy of emails sent throughout 2014 from Sezai Ozdemir (Defendant SST’s Financial Controller) to Defendant SEFER and the Plaintiff’s employees relating to the juxtaposition of Defendant SST’s expected 2014 shopping sales with its actual 2014 shopping sales and a comparison of the net commissions to Defendant SST’s guaranteed payment amount of $631,000.00.
Attached hereto as Exhibit “D” to Plaintiffs’ Complaint is a true and correct copy of emails sent in November of 2014 from Defendant SEFER to Plaintiff’s employees regarding Defendant SST’s owing $790,229.29 under the 2014 shopping agreement to the Plaintiffs.”